Heat Pump Savings Calculator
A heat pump typically cuts heating costs most when replacing electric resistance or oil heat, often paying back in a few years. The federal 25C heat pump credit ended December 31, 2025 — enter any state, local, or utility incentive you qualify for below to get an accurate payback estimate.
Assumptions & advanced options
Data updated: . Sources: EIA electricity data, DOE
How heat pump savings are calculated
We estimate your home's annual heating energy demand from its square footage and a climate factor, which accounts for how cold it gets in your region. That demand figure represents the total heat energy your home needs over a heating season, expressed in BTUs or equivalent kWh of heat output.
We then calculate what it costs to deliver that heat with your current system and with a heat pump. For your current system, the cost is heat demand divided by the system's efficiency, multiplied by your fuel price. For a gas furnace running at 80% efficiency, for example, you burn 1.25 units of gas to get 1 unit of heat. For a heat pump, the cost is heat demand divided by COP, multiplied by your electricity rate. A COP of 3.0 means you get 3 units of heat per unit of electricity consumed.
Annual savings is the difference between those two running costs. Payback is the net install cost (after any incentives you entered) divided by the annual savings. The CO₂ reduction estimate uses the regional grid emissions intensity for the electricity consumed by the heat pump, compared to the direct emissions from burning the fuel you currently use.
The model uses a single annual average for each price. It does not model time-of-use electricity rates or seasonal fuel price swings. If you have a time-of-use rate with cheap overnight power, your actual savings could be higher. For a deeper look at how the numbers work in different climate zones, see the full guide linked below.
What changes your result
- Home size and climate zone — a larger home or colder climate means higher heating demand and larger potential savings.
- Current fuel type and price — switching from expensive fuels like oil or propane produces bigger savings than switching from cheap natural gas.
- Heat pump COP — a higher COP means lower electricity consumption for the same heat output; cold-climate models vary considerably in seasonal COP.
- Electricity rate — a high electricity rate partially offsets the efficiency advantage of the heat pump; the savings are largest when electricity is cheap relative to your current fuel.
- Install cost — the gross installation price is the main driver of payback period; this varies widely by equipment, home configuration, and contractor market.
- Incentive amount — rebates or credits reduce net cost and shorten payback; the federal 25C credit ended December 31, 2025, but many state and utility programs remain active.
Read the full guide: Heat Pump Savings, Explained →
Frequently asked questions
- Does a heat pump actually save money on heating?
- It depends on what you heat with today. Heat pumps are dramatically cheaper than electric resistance or oil heat, and often cheaper than gas, because they move 2.5–4 units of heat per unit of electricity. The calculator above compares your current fuel to a heat pump at your local prices.
- How long until a heat pump pays for itself?
- Payback is the net install cost (after any incentives) divided by your annual heating savings. Switching from electric resistance or oil often pays back in a handful of years; switching from cheap natural gas can take longer.
- What is COP and what number should I use?
- COP (coefficient of performance) is how many units of heat the pump delivers per unit of electricity. Cold-climate heat pumps average a seasonal COP around 2.5–3.5. The calculator defaults to 3.0.
- Are there still incentives for heat pumps in 2026?
- The federal Energy Efficient Home Improvement Credit (25C, which covered 30% of heat pump costs up to $2,000) ended for property placed in service after December 31, 2025. State, local, and utility rebate programs vary widely and many are still active — enter any incentive you qualify for in the calculator, and read the full guide for current programs in your area.
- Does a heat pump work in cold climates?
- Cold-climate heat pumps (sometimes called hyper-heat or cold-weather models) are designed to operate efficiently down to -13°F (-25°C). Their COP drops as outdoor temperatures fall, which is why the seasonal average matters more than the peak-day rating. If you live in a very cold region, use a COP closer to 2.0–2.5 for a conservative estimate.
- Can a heat pump replace both my furnace and air conditioner?
- Yes. A heat pump both heats and cools, so it can replace your furnace and your central AC unit. If you currently pay for both heating fuel and air conditioning electricity, the combined savings can meaningfully shorten the payback period — though this calculator focuses on the heating side only.